Romney Campaign Says Tax Report Presents Incomplete Picture

FILE - In this July 18, 2012 file photo, Republican presidential candidate, former Massachusetts Gov. Mitt Romney speaks in B
FILE - In this July 18, 2012 file photo, Republican presidential candidate, former Massachusetts Gov. Mitt Romney speaks in Bowling Green, Ohio. Want to be among the first to know who Romney picks for a running mate? There's an app for that. Romney's campaign on Tuesday announced an iPhone and Android application to alert supporters when Romney makes his vice presidential pick. The campaign promises they can find out who Romney chooses "before the press and just about everyone else (except maybe Ann)." (AP Photo/Evan Vucci, File)

The Romney campaign disputed the findings of a study released Wednesday that found that the Republican candidate's tax plan would raise taxes on middle- and lower-income earners while lowering the overall tax burden on the wealthiest Americans.

"The study does not account for important aspects of Gov. Romney’s pro-growth plan," said Romney spokeswoman Andrea Saul.

A Romney policy adviser who is not authorized to talk to the press provided more details. The aide wrote in an email that the study by the Tax Policy Center does not include the economic growth that would result from the lowering of the corporate tax rate and from cutting the size of government over the next decade.

The study said that Romney's plan would shift at least $86 billion away from higher-income earners onto lower- and middle-income earners.

But the Romney campaign said that by ignoring the Republican's intent to lower the corporate tax rate from 35 percent to 25 percent, the study "discredits the TPC immediately" because the study is "based on flawed assumptions."

"A reduction in the corporate income tax, for example, will directly translate into higher wages for workers," the policy adviser said. "This increase in wages for workers will increase individual income tax receipts; a factor not taken into account at all when TPC made its assumptions about the nature and level of base broadening which would be needed in order to achieve revenue neutrality."

The Romney adivser cited a Tax Foundation study that said that a 10 percent cut in the corporate rate would raise wages by 9 percent.

The TPC study also did not include spending cuts in its analysis of Romney's plan.

"Ignoring the spending reductions made in the Romney economic plan also discredits the TPC analysis as it ignores the impact of economic growth from spending restraint," the adviser said.

The authors of the TPC study said that if they counted spending cuts in their analysis it would likely make Romney's plan "more regressive because government spending tends to benefit low- and middle-income households more than tax preferences do."

UPDATE: 4:15 p.m. -- The TPC report addressed so-called "dynamic scoring" that some economists say helps tax cuts pay for themselves in increased economic growth and resulting higher tax receipts.

Using a model presented in the past by Romney economic adviser Greg Mankiw, the TPC study said that if economic growth occurred at the rate they predicted, Romney's plan would still shift about $33 billion (instead of $86 billion) away from high earners and onto lower- and middle-income earners.

"Thus even generous assumptions regarding the ability of tax cuts to partially pay for themselves does not change the basic qualitative results," the TPC study concluded.



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